Nohiria Ram v. The Union of India and Others

s. K. Das!. S. K. DAS J.-These are two appeals by special

leave. Pt. Nohiria Ram is the appellant in both ap-peals. He had also filed a petition (petition No. 397 of 1955) under Art. 32 of the Constitution in which he had prayed for the issue of an appropriate writ to the Union of India, respondent 1, and the Director General of Health Services, New Delhi, respondent 1957 2, directing them to forbear from giving effect to an Nohiria Ram order of dismissal passed by respondent 2 against the v. petitioner on October 3, 1955. That petition was, Tire Union of India however, dismissed, as withdrawn. Therefore, the s. K. Das 1. present judgment is confined to the two appeals, and the relevant facts relating thereto are stated pelow.

Formerly, the appellant held a permanent appoint-ment as a civilian clerl,{ in the office of the Royal Air Force, No. 3 (Indian) Wing, Quetta. On March 17, 1928, he applied for the post of a clerk in the office of the Director General, Indian Medical Service, New Delhi (now known as the Director General, Health Services, New Delhi). The appellant succeeded in his application and on March 28, 1928, he was told that there was a vacancy in the office of the Director Gene-ral in the grade of Rs. 75-4-155, it was further stated that the appointment would be for one year in the first instance, though there was likelihood of its being made permanent; and if the appellant agreed to accept the post, he was directed to join in the office of the Director General at Simla on April 16, 1928. A request was also made to the authorities of the Royal Air Force to grant the appellant a lien on his permanent post in the Royal Air Force till February 28, 1929, by which date the question of the permanency of the appoinJ-ment in the Director General's office was to be decid-ed. .The appellant joined his new post on April 16, 1928. On February 26, 1930, the Government of India in the Department of Education, Health and. Lands, which was the controlling Department so far as the office of the Director General; Indian Medical Service, was concerned, conveyed sanction to the appointment, with effect from April 1, 1930, of an additional clerk . in the office of the Director General in the grade of

Rs. 75-4-155 to deal with the work of the Indian Re-search Fund Association on the understanding that the average cost of the appointment together with leave and pensionary contributions thereon was tQ be re-covered from the Association. On April 30, 1930, ihe Director General, Indian Medical Service, wrote to 1957 the Secretary, Public Service Commission, intimating Nohiria Ram that the appointment of an additional clerk had been

v. sanctioned by the Government of India for work of The Un~ India the Indian Research Fund Association; the Director

s. x. DasJ. General then stated that the incumbent of the addi-

tional post was the appellant, who formerly held a permanent post in the Royal Air Force, Quetta, and as he was not a candidate who had passed through the Public Service Commission the Commission was asked to give approval to his permanent appointment in the said post. To this the Secretary, Public Service Com" mission, gave the following reply :

"With reference to your letter No. 219/516 dated the 30th April, 1930, I am directed to say that the Public Service Commission have no objection to the confirmation of the temporary clerk who is at present employed on the work of the Indian Research Fund Association subject to the condition that this will not give him any claim to appointment as a Routine Divi-sion clerk in the Secretariat and its attached offices."

This :reply of the Public Service Commi~sion was shown to the appellant and he was specifically asked to note the condition that he would have no claim to an appointment as a routine division clerk in the Secretariat or attached offices, the office of the Direc-tor General, Indian Medical Service, being an office attached to the Secretariat. On May 26, 1930, the appellant saw the letter of the Public Service Com-mission and noted-"'Seen. Thanks". On June 12, 1930, the appellant was confirmed in the additional post with effect from April 1, 1930. On April 10, 1931, the appellant was transferred on foreign service under the Indian Research Fund Association as a second grade assistant in the grade of Rs. 120-8-160-10-350 on condition that the Association would continue to pay the average cost of the post together with leave and pensionary contributions etc. The appellant continu-ed to serve under the Indian Research Fund Associa-tion tili September 17, 1944, with some breaks for small periods during which he reverted to the office of the Director General to officiate as· assistant, first 1957 grade or special grade, on Rs. 200-12-440. On June Nohiria Ram 10, 1932, the Governor General-in-Council sanctioned v. the transfer of the appellant to foreign service under The U11i011 of India the Indian Research Fund Association with effect from s. K. Das 1. April 10, 1931. On August 15,· 1944, the appellant made a representation to the Secretary, Indian Re-search Fund Association, in which he made a request that he should be reverted to his parent office. The ·reason given was that the appellant was "being treat-ed indifferently and there had been some misappre-hensions in-the past and there might be similar mis-apprehensmns in the future." On September 11, 1944, the Secretary, . Indian Research Fund Association, WTote to the appellant to say that his application for reversion to the· office of the Director General was granted and that the appellant should revert to the office of the Director General with effect from September 11, 1944. As the previous consent of the Director General had not been obtained to the rever-sion, there was naturally· some trouble and the Direc-tor General asked the appellant to report himself for duty to the Indian Research Fund Association. The appellant then made certain representations in November 1944 and January 1945 in which he sub-mitted that the post which he held was a permanent post in the regular establishment of the Director General, Indian Medical Service, and that he should be treated, on reversion to the parent office, as a senior assistant who was entitled to all increments and pro-motions available to a permanent member of the re-gular establishment of the Director General, Indian Medical Service. To these representations, the appel-lant received the following reply :

"In reply to a recent communication from the Secretary, 1.R.F.A., the Government of India, E.H; & L. Department, affirmed that Mr. Noh~ria Ram was governed by the orders contained in their letters No. F. 9-22/39-H dated the 8th August, 1939, and No. F. 37-13/4~-H. dated the 27th November, 1941. These orders clearly state-1957 (1) that the substantive post of Mr. Nohiria Ram Nohiria Ram is attached to this office for the work of the I.R.F.A.;

v. ,, l ,. (2) that it is outside the regular cadre of this 1.11e vlllon OJ llOlQOffice;

s. K. Dasi. (3) that Mr. Nohiria Ram should not be absorbed

in the regular cadre of this office on the occurrence of a vacancy in that cadre; and

( 4) that the post should continue to be retained outside this cadre until Mr. Nohiria Ram !"etires.

Mr. Nohiria Ram was confirmed in the above post only after he had accepted in writing the condition that he would have no claim to a post on the regular establishment of this office. This condition was im-posed as he is an "unqualified clerk."

The appellant was, however, dissatisfied with this order and continued to make further representations, and ultimately on December 17, 1945, he expressed his inability to work in the office of the Indian Re-search Fund Association, which he characterised as a "private body". It appears that the appellant was then suspended with effect from December 14, 1945, the date on which he was to have joined his duty in the post of a clerk attached to the office of the Director . General, Indian Medical Service, for work of the Indian Research Fund Association. A charge sheet was served on the appellant on January 10, 1946, to the effect that on the expiry of his leaye for ten days, he had refused to return to duty to his substantive post of clerk attached to the office of the Director Gene-ral, Indian Medical Service, for work of the Indian Research Fund Association. The appellant submitted a written statement and made certain further repre-sentations. On September 5, 1946, the orders of sus-pension etc., were modified, and the following order was passed:

"Mr. Nohiria Ram is informed that in modification of the existing orders on the subject the Government of India have decided that while continuing to hold the extra cadre post which was originally sanctioned for the work of the I.R.F.A. he will in future be em-pioyed on the ordinary work of this office. He will continue to be subject to the existing disqualifica-1957 tions, namely, that he will have no claim to appoint-Nohiria Ram ment as a routine division clerk in the Secretariat or v. its attached Offices or to inclusion in the regular cadre The U11ion of I11dia of the ministerial establishment of this office. S. K. Das

In accordance with the above decision, Mr. Nohi· ria Ram is directed to report himself for duty to Cap-tain J. M. Richardson, D.A.D.G.(P), in this office at Simla immediately. He will be posted in the Indian Medical Review Section."

In. pursuance of the aforesaid order, the appellant joined at Simla and on March 30, 1948, he instituted a suit against the Union of India asking for a declara-tion that he was in the service ot the Union of India as a member of the permanent regular ministerial establishment of the office of the Director General, Indian Medical Service. He also claimed certain other reliefs which were, however, given up .. The suit was decreed by the learned Subordinate Judge of Delhi on March 10, 1951. The Union of India filed an appeal, being First Appeal No. 190 of 1951. This appeal was allowed by the Punjab High Court by its judgment dated October 30, 1953. The result was that the ap-pellant's suit was dismissed. The appellant asked the · Punjab High Court for a certificate f<;lr leave to appeal to this Court. That application was refused. The ap-pellant then moved this Court and obtained special leave, and Civil Appeal No. 116 Of 1957 has been filed· in . pursuance of the special leave granted by this Court and is directed against the judgment and de-cree of the Punjab High Court dated October 30, 1953, in First Appeal No. 190 of 1951.

Civil Appeal No. 117 of 1957 continues the story of the appellant's alleged grievances after he had obtain-ed his decree from the learned Subordinate Judge of Delhi. We have stated before that against that de-cree the Union of India filed an appeal on July 24, 1951. During the pendency of that appeal, the appel-lant moved the Punjab High Court by means of a peti-tion under Art. 226 of the Constitution for the issue of a writ directing the Director General, Health Services 1957 New Delhi, to disburse immediately the pay and Nohiria Ram allowances to which the appellant said he was entitled

v. . for the month of November, 1952. What happened nie Uni'!!!_.!f l•dia was this. In October, 1952, the appellant was work-

s. K. Dasi. ing in the Public Health Section I, and on October 3,

1952, he proceeded on leave on average pay till Octo-ber 11, 1952. On his return from leave on Octboer 13, 1952, he submitted a joining report and asked for post-ing orders. He was asked to work in the Public Health Section I from where he had gone on leave. He re-fused to do so, and asked for an interview with the Director General. This was refused, and the appel-lant was told that unless he resumed duty in the Pub-lic Health Section I,...he would be deemed to have been absent from office without permission. The appellant still continued in the recalcitrant attitude which he had adopted, presumably in the belief that after the decree in his favour he was entitled to all promotions and increments available to a permanent member of the regular establishment. He came to office, but in- ·stead of going to the Public Health Section I, he occu-pied the seat meant for the record sorter in the Gene-ral Section. In other words, since October 13, 1952, the appellant did no work. He was paid his salary till the end of October, 1952, but payment was withheld for November, 1952. On December 20, 1952, the ap-pellant filed his petition under Art. 226. On the same date on which the appeal of the Union of India was allowed, the application under Art. 226 was also dis-missed by the Punjab High Court on the ground that the appellant was guilty of disobedience and insub-ordinate conduct and was not entitled to any relief. Against this order the appellant has filed Civil Appeal 117 of 1957, after having obtained special leave from this Court.

The crucial question for decision in these two ap-peals is if the appellant held a post in the permanent and regular ministerial establishment of the office of the Director General, Indian Medical Service, New Delhi. The High Court .has held that the post in which the appellant was made permanent was no doubt a post attached to the office of the Director General for 1957 the purpose of the work of the Indian Research Fund Nohtrta Ram Association, but it was a post outside the regular cadre Th u. t v. Ind" of the office of the Director General, and this was made 10 n dear to the appellant from the very beginning. The s. K. Das J. High Court found that the appellant knew and had. accepted the condition on which he was appointed; and the grieyance he made after a lapse of about 14 years was unsubs.tantial and fanciful.

Learned counsel for the appellant has contested tb~ correctness of the aforesaid findings. It is not dis-puted that the appellant did know the condition which the Public. Service Commission had imposed in ap-proving of the appointment of the appellant on May i6, 1930. The argument before us is (1) that on a true construction of the relevant rules and Govern-ment orders governing the conditions of the appellant's service, the appellant on his confirmation with effect from April 1, 1930, became a permanent member of the regular establishment of the office of the Director General, Indian Medical Service, and (2) that the Public Service Commission had no authority to impose any condition in derogation of those rules and orders.

Let us now examine the rules and orders on which the appellant relies. Fundamental Rule 9( 4) explains what is meant by a cadre; it means in effect the strength of an establishment or service (later amend-ed to include a part of a service) sanctioned as a sepa-rate unit. The establishment we are concerned with in the present case is the establishment of the office of the Director General, Indian Medical Service. The total sanctioned strength of that establishment was 30. In their letter of February 26,. 1930, the Govern-l!lent of India conveyed sanction to the appointment of an additional clerk to deal with the work of the Indian Research Fund Association on the understand-ing that the average cost of the post plus leave and pensionary contributions would be recovered from the Association. The question is if this additional post was a permanent increase of the regular cadre or was a post outside the cadre. In 1934 the Accountant 1957 General, Central Revenues, raised the question and en-Nohiria Ram quired of the Director General, Indian Medical Ser-

v. vice, how the pay of 31 persons was shown in his The Union of India establishment as against the sanctioned strength of

s. K. Das J. 30 only. The Director General, Indian Medical Ser-

vice, replied that the number 31 included the post of the additional clerk, though the post was not included in the sanctioned strength of his office. In 1935 the Director General, Indian Medical Service, wrote to Government and said : "In practice the post has since been considered outside the regular cadre of my office." The Director General, Indian Medical Service, then added:

"I consider that F. R. 127 is the only rule under which additions to a regular establishment can be made for the performance of the work of private bodies. As this rule does not seem to contemplate the constitution of two separate establishments in one and the same office I am of opinion that the two posts in question should be regarded as additions to the strength of my office and as such they must remain under my administrative control."

To this letter the Government of India replied to the effect that though the post was under the adminis-trative control of the Director General, Indian Medical Service, it was a post outside the regular establish ment and the incumbents of this post as also of another similar post should be absorbed in the regular estab-lishment when vacancies occurred in future. Tlfis order was partially modified in 1939 when it was said : "The Government of India have decided that the post of clerk attached to your office for the work of the Indian Research Fund Association, which is outside the regular cadre of your office, should not be absorbed in that cadre on the occurrence of a vacancy. It should continue to be retained outside the cadre as at present until Mr. Nohiria Ram remains on deputation to a post under the Indian Research Fund Association and the Association should continue to pay the leave and pension contributions to Govern-ment on account of the latter post. In the event of Mr. Nohiria Ram's reversion to his substantive post 1957 the Association will, as originally stipulated in this Nolziria Ram Department letter No. 467-H. dated 26th February, v. 1930, be required to pay the average cost of the post The U11io11 of lliaia plus leave and pension contributions. The post will s. K. DasJ. be abolished on retirement of Mr. Nohiria Ram from service."

It is quite clear from the aforesaid orders that the post to which the appellant was appointed perma-nently in 1930, was a post outside the cadre of the re-gular establishment of the Director General, Indian Medical Service. Indeed, on April 2, 1935, the Home Department (as it was then called) ruled on a refer-ence made to it that "the strength of the ministerial staff of the Director General, Indian Medical Service, was exclusive of the two posts the cost of which was recovered from the Indian Research Fund Associa-tion."

The sheet anchor of the case of the appellant as presented by his learned counsel is Fundamental Rule 127 in Section III, Chapter XII, read with rules 24 · and 44 of the Civil Services (Classification, Control and Appeal) Rules, 1930. The case so presented is this : it is argued that under the Classification, Con-trol and Appeal Rules the Governor General in Coun-cil was alone competent to constitute a cadre by de-claring the sanctioned strength of the establishment of the Director General, Indian Medical Service and Fundamental Rule 127 lays down how the recovery of the cost is to be made when an addition is made to a regular establishment for the benefit of private per-sons or bodies, and the argument proceeds to state that as the post in which the appellant was perma-nently appoin~ed in 1930 was not constituted into a separate cadre, that post must be held to be an addi-tion to the regular establishment of the Director Gene-ral, Indian Medical Service and, therefore, an integral part of the same cadre. We are unable to accept this argument as correct. It is true that the additional post in which the appellant was made permanent was not constituted into a separate cadre; the obvious 1957 reason was that it was an additional post outside the Nohiria Ram regular cadre. None of the rules to which learned

v. counsel has drawn our attention prevents the appro-The Umonof India priate authority from creating an additional post out-

s. K. Das J. side the regular cadre of a particular office, to which

the post may be attached for purposes of administra-tive control. F. R. 127 on which learned counsel has placed so much reliance is in these terms :

F.R. 127. "When an addition is made to a regular establishment on the condition that its cost, or a de-finite portion of its cost, shall be recovered from the persons for whose benefit the additional establishment is created recoveries shall be made under the follow-ing rules:

(a) The amount to be recovered shall be the gross sanctioned cost of the service, or of the portion of the service, as the case may be and shall not vary with the actual expenditure of any month.

(b) The cost of the service shall include contribu-tions at such rates as may be laid down under Rule 116 and the contributions shall be calculated on the sanctioned rates of pay of the members of the establishment.

(c) A local Government may reduce the amount of recoveries or may entirely forego them."

The Rule corresponds to Art. 783 in Chapter XLI of the Civil Service Regulations, and lays down the principles in accordance with which the cost, or a definite portion of the cost, of the additional post shall be recovered. It d.oes not decide the question if the post is part of the cadre or not; that depends on the decision of the appropriate authority, and we know that in the present case the appropriate autho-rity had decided from the very beginning that the additional post which the appellant held was outside the regular establishment of the Director General, Indian Medical Service.

It has been next argued that under the relevant Rules members of the regular establishment alone could be sent on foreign service and as admittedly Government sanctioned the transfer of the appellant to foreign service with effect from April 10, 1~31, the 19S7 appellant must be held to be a member of the regular Nohiria Ram establishment of the Director General, Indian Medical v. Service. In our opinion, this argument is also equally77ie Union of Jnd;q, fallacious. The Rules relating to 'Foreign Service' are s. K. Dar J. to be found in Section III, Chapter XII and the parti-cular Rules to which our attention has been drawn are Fundamental Rules 111 and 113. In so far as it is relevant for our purpose, Fundamental Rule lU says that a transfer to foreign service is not admissible unless the Government servant transferred holds a lien on a permanent post; Fundamental Rule 113 says that a Government servant transferred to foreign ser-vice shall remain in the cadre or cadres in which he was included in a substantive or officiating capacity immediately before his transfer and may he. given such substantive or officiating promotion in those cadres. as the authority competent to order promotion may decide. In the present case, the appellant held a lien on the additional post'in which he was confirm-ed; therefore, his transfer on foreign service was ad-missible under Fundamental Rule 111. He did not, however, belong to a cadre immediately before his transfer, and Fundamental Rule 113 had no application_ in his case.

Lastly, it has been argued that the Public Service Commission had no authority to impose a condition that the appellant would .not have any claim to ap-pointment as a Routine Division Clerk in the. Secre-tariat or its attached Offices. In one of his representa-tions the appellant said that he signed the note which drew his . attention to the condition on "the under-standing that it had no value whatsoever, being con-trary to the rules and Government orders". The contention of the appellant is that the Public Service Commission which was constituted in 1926 and func-tioned under the rules published in the Home Depart-ment notification No. F. 178/14/24 Ests. dated Octo-ber 14, 1928, dealt with the recruitment of clas8 I and class II officers of the Civil Services in India, and the rules then in force did not provide for the discharge-19s1 of any function by the Public Service Commission in Nohiria Ram respect of the recruitment to and control of the sub-

v. ordinate service to which the appellant belonged. The Union of India This contention was accepted by the learned Subordi-

s. x-:DasJ. nate Judge. The High Court, on appeal, held that

the appointment of the appellant was gol(erned by the instructions laid down in an office memorandum of the Government of India in the Home Department dated December 8, 1928, paragraph VIII whereof stated-

"Spedal cases.-To meet cases where a candidate, though not possessing the prescribed educational qualification, has acquitted himself satisfactorily in examinations of a higher or equivalent standard, or has acquired great experience of Government service outside the ministerial staff or possesses special quali-fications for a particular class of work, the Public Service Commission are empowered (a) to admit to the examination persons possessing educational quali-fications other than those prescribed, and (b) to ex-empt from the examination or to admit to a particular Division persons who by reason of their previous re-cord can in their opinion properly be exempted or admitted as the case may be. In the case of persons already in Government service such action will be taken only on the recommendation of the Department concerned. In view of the discretion vested in the Commission by this proviJ;ion, it will no longer be open to Departments to recruit independently for their offices or subordinate offices men with special or te"chnical qualifications. Before making any such appointment they will be required to secure the Pub-lic Service Commission's concurrence."

The case of the appellant, who had not passed the qualifying examination h.eld previously by the Staff Selection Board whose place the Public Service Com-mission took in 1926, was presumably referred to the Public Service Commission under the aforesaid para-graph. Learned counsel for the appellant has contend-ed that even the instructions contained therein do not justify the imposition of a condition by the Public Service Commission, and the only powers the Public 1957 Service Commission could exercise were those· men-Nohirta Ram tioned in (a) and (b) thereof. v.

We think that it is unnecessary to examine the The Union o/Intlill validity of these contentions on the present occasion. s. x. Das 1. Assuming but without deciding that it was not neces-sary to refer the case of the appellant to the Public Service Commission or that the Public Service Com-mission could not impose any condition on the appoint-moot of the appellant, the fact still remains that the appropriate authority which sanctioned the additional post made it quite clear that the post was outside the regular cadre and the Director General, Indian-Medi-cal Service, said that tbe post had been treated in practice as being outside the regular establishment, though attached to his office for purposes of adminis-trative control. That being the position, it matters little what powers the Public Service Commission had with regard to the case of the appellant referred to it. We must make it clear, however, that we do not ex-press dissent-it being unnecessary for us to do so-from the view expressed by the High Court that in giving concurrence to the appointment of the appel-lant, it was.open to the Public Service Commission to give a conditional concurrence.

This brings us to a close of the case of the appellant in Civil Appeal 116. Only a few words are necessary to dispose of Civil Appeal 117. That appeal requires no serious exegesis of any recondite service rule or obscure departmental order. In view of the finding that the appellant was not a member of the regular establishment of the Director General, Indian Medical Service, he was not entitled to claim seniority in that office. It is ti:ue that the appellant obtained a decree from the learned Subordinate Judge; it was, however, a declaratory decree only, as the appellant did not press for the other reliefs as to increment, promotion etc. Even the declaratory decree was. put in jeopardy when respondent No. 1 appealed from it. Ill these circumstances, how could the appellant refuse to do LISup.Court/61-4 1957 the work given to him? We have referred to the Nohirta Ram circumstances in which the appellant refused to do

v. work in the Public Health Section to which he was The Ulfion. of India allotted; he did not work from October 13, 1952 and

s. K.Das1. got no pay from November, 1952. The appellant has

to thank himself for the predicament in which he is placed. All that we can say is that if he had shown patience, good sense and moderation, he could have avoided. a great part of the trouble he brought on him-self.

In the result, both appeals fail and are dismissed with costs; as the appeals were heard together there will be one hearing fee to be shared by the respon-dents in the two appeals.

Appeals dismissed.

1957 THE AGGARWAL CHAMBER OF

Novtmbtr, 11. COMMERCE, LTD.

'V.

M/s. GANPAT RAI HIRA LAL

(B. P. SrNHA and J. L. KAPUR JJ.) Income-tax-Assessment of agent in respect of profits held fO'r non-resident principal-Agent's right to claim deduction for payment made-Ultimate liability of princi-pal to income-tu on basis of his world income, if a relevant consideraticn--Indian Income-tax Act, (XI of 1922), ss. 40 (2)' 42 (1). .

The appellant company and the respondent firm were carrying on business in the erstwhile Patiala State, and were non-residents in British India. The appellant, ·acting as commission agent for the respondent, entered into several forward transactions with a Hapur firm of commis- .sion agents. The profits accruing on these transactions amounted to Rs. 29,275-2-6 on which the Hapur firm paid .a swn of Rs. 9,314-13-4 as income-tax. In 1943 the appellant was ordered to be wound up and the respondent was placed ·on the list of contributories. The Official Liquidator applied to the Liquidation Judge for a payment order for a sum which included the amount of income-tax paid by the Hapur firm for and on behalf of the respondent. The main -eontention raised on behalf of the respondent was that it 'had no taxable income in the year in dispute and was not liable to pay any income-tax and that, consequently, it was 11ot liable for the income-tax paid by the Hapur firm.

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 116 and 117 of 1957.

Appeals by special leave from the judgment and order dated October 30, 1953, of the Circuit Bench of the Punjab High Court at Delhi in Civil Regular First Appeal No. 190 of 1951 and Civil Writ No. 82-D of 1952.

D. R. Prem, T. S. Venkataraman and K. R.

Chaudhry, for the appellant.

R. Ganapathy Iyer, Porus A. Mehta and R. H. Dhebar, for the respondents.

1957. November 8. The Judgment of the Court was delivered by